Today, working people in Wisconsin and across the country are struggling — yet the stock market is near an all-time high and corporations are earning record profits. The link between corporate profits and worker prosperity, which provided middle-class jobs for many Wisconsinites throughout the middle and late 20th century, has fissured. The reason for this broken link — and what to do about it — has been a puzzle for economists, for policymakers, and for every working American.
New research helps us better understand one piece of that puzzle. A recent study from leading economists Marshall Steinbaum, Ioana Marinescu, and Jose Azar has found that the average labor market is highly concentrated and as the concentration in a labor market goes up, average wages go down — by as much as 17 percent. In short, if there are only a handful of employers in an area, then they don't have to compete with one another for workers, which means employers can pay less, and workers will be stuck without the outside job offers that would give them leverage to claim higher wages.
While this may be news to economists, it isn’t news to Wisconsinites. Farm equipment mechanics, for example, are among those struggling as a result of mergers and acquisitions in the industry. The New York Times recently told the story of Matt Gies, a 30-year-old farm equipment repairman from Berlin, Wisconsin, who has struggled to find a good-paying, stable job after industry mergers resulted in fewer and fewer independent dealerships — and therefore fewer options where Gies could do the same work at a fair wage.
The good news is that we have tackled this problem before — and we can do it again. At the beginning of the 20th century, industrialization was changing the economy and massive companies were gobbling up competitors, leaving many Americans without a livelihood or a safety net. Great leaders like Robert La Follette and Franklin Roosevelt tackled these “trusts” and broke up monopolies, leveling the playing field for many.
Today, leaders in the House of Representatives recently created the Antitrust Caucus to take steps to crack down on corporate consolidation as a way to strengthen our economy and our democracy, and congressional Democrats included a new plan to fight corporate consolidation as part of a new economic agenda released earlier this year.
These are critical steps — but there is still much work to be done in the long-term effort to rebalance the outsized power currently being hoarded by the biggest corporations. To get the economy growing again, the recent GOP tax bill must be repealed, shareholder power must be checked, and public goods that level the playing field — like broadband access and affordable health care — must be expanded. Above all, Wisconsinites — those from my district and those living far from Madison — must demand that their elected leaders represent the interests and values of working Americans, not those of massive corporations and the megarich. Our economy — and the well-being of our country — demands it.
Rep. Mark Pocan, D-town of Vermont, represents District 2 in the U.S. House of Representatives. Nell Abernathy is VP of research and policy at the Roosevelt Institute.
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